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Gottschalks watches competition

Regional department store Gottschalks, with over 70 stores in six Western states, is holding its own against tough competition from Kohl's, while keeping an eye on the fate of another competitor, Mervyn's, the company stated during its first quarter conference call last week.

Target Corp.'s Mervyn's, along with Marshall Field's, is up for sale, but a buyer has yet to be announced.

Speaking of Kohl's openings near Gottschalks locations, Jim Famalette, CEO, said the stores had "some impact," but the affected Gottschalks stores still had "positive comps."

Regarding the fate of Mervyn's, Famalette said the situation could gain some clarity in the next 60 days, if the company finds a home.

"We compete with them in every market we're in," he said. "They, more than likely, will either continue operating as an ongoing entity or be carved up as a real estate package, with everyone selecting different locations."

Famalette said the latter would provide Gottschalks with a unique opportunity.

"We are interested in some of their locations. It would allow us to get into some markets where no opportunity currently exists because of no-growth policies."

However, if Mervyn's changes hands, but still operates as a competitor, that would be a more uncertain situation.

"It's one thing knowing who you are dealing with, on the other hand, if there is change, we will have to deal with that as it occurs, but (right now) we are not sure how that would relate to us," said Famalette. "It could, however, mean that some locations would close, and that would drive more business to our doors."

He added that Mervyn's continued operation is not the worst thing that could happen.

"If it's just replacing one operator with another, then it's not as serious as Kohl's opening a store in a market where they didn't exist before. In this case, if it closes, we will get our fair share of that market share," said Famalette.

He also said that any new Gottschalks stores opening in Mervyn's locations would probably be "net" new stores, and not merely replace a closing Gottschalks location.

"There might be some switches, but the net increases would be in places where we couldn't break in due to a lack of availability," added Famalette.

On the store-assortment level, Gottschalks is also following an industry trend by working to better engage the Hispanic market in the United States. Famalette said the company has started a long-term push in that direction.

"This is something that really needs to be built from the ground up," he said. "The early phase, which has already begun, is the in-store training so that the associates are more aware of what we want to do. The second and third quarter will include more in-store signage and various other things we have not finalized yet."

All of these changes come against the backdrop of Gottschalks preparing for its 100 year anniversary. Marketing for the milestone began in March, said Famalette, and will continue up to the September birthday.

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